Infrastructure Finance in Indonesia


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Infrastructure Finance in Indonesia

  1. 1. Infrastructure Finance in Indonesia Fiscal Policy Office, Ministry of Finance of the Republic of Indonesia Presented at The 7th APEC Senior Finance Officials Meeting (ASFOM7), Tokyo, Japan, 18-19 February 2010
  2. 2. Indonesia Infrastructure Financing 2  Indonesia needs to invest US$143 billion in infrastructure development US$ 120 billion over the next 5 years (2010 – 2014). 1600 However the Government has limited budget to fullfill it. 1400 Financing Gap:  Due to this budget limitation, a large- 1200 US$ expected to be 82.8 covered through scale private sector participation is 1000 bio PPP, CSR, community essential to fill the gap. We expect (69%) 800 participation that almost 70% of it will come from the private sector. 600 US$  To encourage private sector 400 37.2 Estimated GOI Financing involvement, the Government has 200 bio Capacity (31%) developed financing facilities such as Land Fund, Guarantee Fund, and 0 Infrastructure Fund. Source: Bappenas, 2009 2
  3. 3. Infrastructure Financing Facilities 3 Capital Guarantee Fund Infrastructure Fund Land Fund (PT. PII) market and (PT. SMI-IIFF) regulatory reform Land Acquisition Cost Recovery / Project & Clearence Policy Risks Cost of financing Financing Refinancing Preparation Bidding Construction Operation
  4. 4. Land Fund 4  Land Revolving Fund (LRF)  Established to provide bridging finance for toll road investors in acquiring the land.  Managed by the Government Investment Unit, Ministry of Finance and will be forwarded through Toll Road Regulatory Agency, Ministry of Public Works.  Until 2009, US$ 154 million has been allocated to Land Revolving Fund.  Land Capping  Introduced to cover the risk of increasing cost of land acquisition above certain level  Government has allocated US$ 523 million for 5 years.
  5. 5. Infrastructure Guarantee Fund 5  Indonesia Infrastructure Guarantee Fund is established to satisfy the following objectives:  Improving the creditworthiness of Infrastructure PPP projects.  Improving the management of the Government’s contingent liability  The Government has established the fund under the name PT. Penjaminan Infrastruktur Indonesia (Persero) on December 30th, 2009. PT. PII is being established as a State-Owned Company and owned 100% by Government.  The Government has allocated US$ 105 million as the company’s initial capital in 2009.  Due to the operational needs and to increase confidence level of investors and lenders, the capital will be added US$ 105 million in the Government’s Budget 2010.  World Bank has committed to provide backstop facility to support the operational of PT PII.
  6. 6. Infrastructure Fund 6  Indonesia Infrastructure Fund is intended to be the provider of long term rupiah financing to infrastructure projects in Indonesia.  Its objectives are:  to offer a range of specialized financial products / services  to address the financing gaps in the financial sector  to un-bundle and re-package risks  to complement the role of the existing financial institutions and banks  to attract private long-term capital into commercially viable projects  Implemented by the establishment of PT. Sarana Multi Infrastruktur on February 26th, 2009 and PT. Indonesia Infrastructure Finance (Persero) on January 15th, 2010.
  7. 7. Infrastructure Development Coverage 7  Development of infrastructure project is designed to accelerate domestic economic activities as well as to improve access for intra-regional trades.  In Presidential Decree No 67/ 2005, there are 8 sectors that are financed by Public Private Partnerships scheme:  Transportation  Road  Irrigation  Drinking Water  Waste Water  Telecommunication  Electricity  Gas and Oil  To serve the intra-regional activities, Indonesia is currently promoting developments of ports such as in Jakarta (Cengkareng), Medan (Kualanamu), and many more others.
  8. 8. Thank You